Sony, HBO, and Showtime are reportedly seeking special treatment for their new streaming video services, though they seem unlikely to get it.
All three companies have talked to Internet service providers such as Comcast about treating their online video offerings as “managed services,” sources told the Wall Street Journal. These services would not count toward subscribers’ data caps, and would run on a separate flow of bandwidth with less congestion than the open Internet. In exchange, cable companies could bundle these streaming services with their Internet plans and get a cut of any subscription revenues.
The story behind the story: The video industry is looking hard for new options. Between Sling TV, Playstation Vue, and Apple’s rumored video service, the number of alternatives to cable and satellite TV is rapidly expanding.
At this point, the government can either allow a handful of these services to prosper through special treatment—with cable companies serving as gatekeepers—or it can keep the lanes open to even more services, all competing for the same bandwidth, data, and dollars.
If it looks like a fast lane and acts like a fast lane…
As the Journal explains it, managed services aren’t exactly the same as the “fast lanes” that net neutrality forbids, because they wouldn’t be occupying any of the bandwidth that’s dedicated to open Internet access. Instead, they’d live on a slice of bandwidth that Internet providers use for specialized services, such as their own digital phone and video-on-demand offerings.
Still, the Federal Communications Commission can regulate these services under new net neutrality rules that take effect in the next few months. If the FCC feels that carriers are using specialized service lanes to evade open Internet rules, the agency is allowed to take action. The question is whether the FCC would view streaming video services as an abuse of the rules. Companies like Sony and HBO may be looking to take advantage of that uncertainty.
As for exemptions to data caps, they’re not prohibited under the FCC’s new rules. But Ars Technica notes that the FCC can step in if it looks like Internet providers are using data caps to kill competition. A cozy deal between streaming video services and Internet providers could invite FCC scrutiny if it makes people less likely to choose alternatives.
The good news for net neutrality advocates: These negotiations aren’t getting anywhere. Comcast has indicated it doesn’t want to do anything that runs afoul of FCC rules. (The company has separate net neutrality restrictions in place as a condition of acquiring NBCUniversal in 2011.) Cable providers are also wary of establishing new services that compete with their own TV offerings, and some told the Journal that such arrangements would require hundreds of millions of dollars in investments.
The Journal also cited Roger Lynch, CEO of Dish Network’s new Sling TV service, as saying these arrangements would be bad for the entire industry, as they would force large video providers to strike deals “under duress” and put small providers at a disadvantage. “It makes a mockery of net neutrality,” he said.